If I have a difficulty of care w-2 with state withholding where do enter this? I tried "withholding not already entered on w-2" but states to not enter a w-2 with a note?

Please refer to the instructions below for how to enter "Difficulty of Care" payments, which are exempt income under Notice 2014-7. This notice provides that certain payments received by an individual care provider under a state Medicaid waiver program, are difficulty of care payments and excludable as income. 

If these payments are paid to you in box 1 of form W-2 (they should not have been), first try to get a corrected Form W-2 from the payer. If you cannot get a corrected Form W-2, do not enter the W-2 in the Wages & Salaries topic. Instead enter it as instructed below: 

• Open your Federal return then click on the Wages & Income tab
• Scroll down to Less Common Income and Show more
• Start or revist Miscellaneous Income, 1099-A, 1099-C
• Choose Other Reportable Income and select start or edit
• When you get to the screen "Any other reportable income?" say Yes. 
• Make the following two entries:

1.  Your first entry description would be "W-2 EIN # number from W-2, Box 1 Medicaid Waiver Payments, and enter the Box 1 amount as a positive number.

2.  Next you will "Add Another Miscellaneous Income Item," and enter the description: IRS Notice 2014-7 excludable income and enter the W-2 Box 1 amount as a negative number. 

This both shows and explains removing the W-2 income, placing a zero on Line 21 of your Form 1040. 

If your W-2 has federal or state taxes withheld, you can enter these amounts in Deductions & Credits under Other Income Taxes as Withholding not already entered on W-2.

Thank you!  I was concerned about the NOTE: do not enter tax pymts or withholding that were reported on forms W-2 etc and this is a W-2 with withholding reported already.

I tried to find "Other Income Taxes as Withholding not already entered on W-2" or just "Other Income Taxes as Withholding" but only found Tax Prep fees and those deductions normally found on Schedule A for Itemized deductions. 

Wouldn't taxes withheld go under a deduction before AGI, like "estimated tax" Payments?

You need to first go to "Estimates and Other Taxes Paid" in the "Deductions and Credits" section, then click on "Other Income Taxes" and then see "Other Income Taxes Paid in 2019" as follows: